Air Cargo: Is 2012 the Turnaround Year?

This is an excerpt of the original article. It was written for the March-April 2012 edition of Supply Chain Management Review. The full article is available to current subscribers.

March-April 2012

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Industry analysts are predicting that 2012 will be a significant year for air cargo recovery, but not without a new set of challenges that seem to be facing shippers and carriers on all hemispheric fronts.

For example, the troubled European Union (EU) is making life difficult for all airlines by imposing a unilateral carbon-trading scheme. Meanwhile, aircraft manufacturers and shippers agree that biofuels must be gradually introduced across the board.

The Asia Pacific, which is still the most vibrant market for U.S. shippers, may be ceding some of its influence to Latin America. Shippers say that fuel and energy costs associated with onerous environmental laws will make “near shoring” more attractive over the next year. (Exhibit 1 on page 56 shows the growing fuel imact on air carrier operating costs over the past decade.)

And don’t forget the security issue that is ongoing for global shippers or carriers. However, with a more harmonized security system in place, global shippers may finally get a break on compliance expenses.

So, with a slowly improving global economy juxtaposed against this growing list of challenges, is the air cargo industry poised for a comeback? The Boeing Company certainly thinks so. Having ended 2011 with a solid earnings report, the company says it reflects continued strong core performance across its businesses.

“Strong fourth quarter operating performance, record revenue and backlog, and expanded earnings and cash flow capped a year of substantial progress for Boeing in 2011,” said Jim McNerney, Boeing chairman, president, and CEO.

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